For Investors Only: Motley Fool's Take on Abraxas, KOG, NOG

Again, a superficial Motley Fool.com article posted to drive subscribers.

But I like anything that has to do with the Bakken (particularly if it's good news).

Motley Fool has been "down" on Abraxas but says it's Bakken play may be it's "savior."

Along the way, Motley Fool writes about KOG and NOG:

... the once struggling Kodiak Oil & Gas. Till about 15 months ago, the Denver-based independent exploration and production company was consistently posting operating losses, until it boosted production from its Williston Basin reserves. As a result, revenues shot up. There's a chance that Kodiak could still be undervalued, given that it can further ramp up production in the Bakken.

Another Bakken player, Northern Oil & Gas, has looked promising as well. This company has an unconventional business model, that of holding non-operating interests, but it has met with relative success. Last year, total production more than doubled over 2010 levels.

Motley Fool on Abraxas:

The company has decided to allot 75% of its 2012 capital budget to develop its Bakken/Three Forks and the Niobrara holdings.

Out of a total $70 million, the Bakken/Three Forks holdings have been allotted a lion's share. The company plans to develop 20 gross wells (six net wells) in 2012, which should have a major impact on production volumes. Currently, Abraxas operates eight wells here.

I still find it amazing what is going on in the Bakken, and apparently a lot of investors on Wall Street are still in the dark. I received a note from a reader yesterday saying that a recent Bakken conference it was evident that Wall Street investors had not heard of the Bakken, or if they did, they did not understand it.

I used to say that $1.5 to $2 billion was pouring into the Bakken on a monthly basis but have since been corrected. The $2 billion might account for 200 rigs at $10 million a piece/well, but then there are infrastructure projects on top of that. The figure being bandied about now is as much as $4 billion/month being poured into the Bakken. For all practical purposes, the bulk of the Bakken is five or six counties i western North Dakota.

Reposting a Link to Citi's Coming "Industrial Revolution"

I posted a link to Citi's talking paper on their analysis of the US energy industry through 2020 a few days ago. Subsequently I posted a rebuttal by Oilprice.com.

Here's another synopsis of the CITI analysis:

Oil and gas production in the United States and North America is going to skyrocket in the next 8 years due to strides in natural resource extraction, write Citi analysts in a report published yesterday. In fact, they went so far as to call North America "the new Middle East," at least in terms of oil production.
 
This—as well as a trend towards declining U.S. energy consumption—will completely transform both the domestic economy and the threats the U.S. will face in the future.

Indeed, Citi economists expect total liquids production to as much as double for the continent in the next decade, and predict that the U.S. could overtake both Russia and Saudi Arabia in oil production by 2020.

For a graphic look at the sudden drop in gasoline retail sales, click here. Retail sales of gasoline have literally dropped off a cliff -- this is a very stunning graph.

The trend for less gasoline consumption began back with the recession of 2008, but the more recent drop is something not seen since the beginning of that graph, starting back in 1984. It is very, very striking. And I don't think the drop off in gasoline retail sales is due to GM's Chevy Volt.

It's interesting to correlate this drop-off with the relative vitality of the US economy. [The operative word is "relative."]

If a Harvard MBA student had only one graph to look at, and it was the gasoline retail sales graph, it would be interesting to read the likely explanation(s) and what it means going forward. Gasoline retail sales are back where they were in 1984, and yet ....

So, I guess I got to rambling, and actually combined two different topics. Sorry. But I figure most people don't/won't have time to look at the Citi paper, but they might have time to look at a graph.

By the way, when you look at the graph, it might shed a little light on why two, maybe three, refineries are closing in the northeast. 

CITI's Energy 2020: Too Optimistic -- Re-Posted

I am again posting this link to Oilprice.com: The No 1 Source for Oil & Energy News.

[For some reason, the link frequently breaks. If it's broken again, cut and paste this URL: http://oilprice.com/Energy/Energy-General/Citigroups-Overly-Optimistic-Energy-Projection-for-2020.html]

I was impressed with the amount of information about the Bakken in this article, comparing it to other fields/other basins around the world.

And then this: of the 150 companies drilling in the Bakken, and some of the biggest being Continental Resources, Whiting, Statoil (BEXP), EOG, and Hess, who does the author single out to demonstrate a point? Fidelity.

Wow, who wudda thought.

The author mentions that Fidelity is operating five rigs. Who am I to argue? Up until several days ago I thought Fidelity had two rigs, and then we thought Fidelity hit a milestone late last week/early this week reporting four active rigs. Whatever, four or five.

It is instructive to this argument to note that Fidelity E&P has just celebrated reaching a production record of 3,500 bd in the Bakken which it derives from 58 wells. As they continue to run 5 rigs, and have been able to drill a long lateral horizontal well in 28 days they should be able to increase production this year, but they are fighting the rapid decline in existing wells, which requires that more wells be drilled every year, and that (as the better spots become drained) so the drilling activity must accelerate to sustain existing production.

It's an interesting article with several graphics for those so inclined.

Humor For The Day: State With Lowest Risk of Political Corruption -- New Jersey

The Corruptible Seven: 

Virginia, North Dakota, South Dakota, 

Michigan, Maine, Georgia, Wyoming

Link here to one of the most bizarre stories of the year. 

What’s behind the dismal grades? Across the board, state ethics, open records and disclosure laws lack one key feature: teeth.

“It’s a terrible problem,” said Tim Potts, executive director of the nonprofit advocacy group Democracy Rising PA, which works to inspire citizen trust in government.  “A good law isn’t worth anything if it’s not enforced.”

Some of the results of the State Integrity Investigation seem more than a little counterintuitive.  New Jersey emerges at the top of the pack, a seemingly stunning ranking for a state with a reputation for dirty politics. And there are other surprises: Illinois, hardly a beacon of clean governmental in recent years, comes in at a respectable number 10. Louisiana ranks 15th.

Tim must have missed the story about the state of North Dakota going after the oil industry for the deaths of six migratory birds. The state enforces its laws.

I honestly do not recall any story coming out of Bismarck or Pierre with regard to political corruption in the last 50 years.

New Jersey at the top of the pack: the least corruptible. Okay.

Fortunately the Wall Street Journal called "them" out on this.

Utica

Locator: 10010UTICA.

 

Articles of General Interest

October 9, 2023: EIA review from 2016.

August 26, 2018: update here.

March 9, 2018: 4Q17 Ohio natural gas results (Utica) are posted. Ohio: 5 bcf/day (boe almost 1 million boe/d).

October 31, 2017: Marcellus / Utica breaking production records ... again. RBN Energy.  

August 23, 2017: production.

April 27, 2017: solving "the Marcellus / Utica problem."

October 6, 2016: the Utica and Marcellus continue to defy the "experts" and the skeptics.

June 21, 2016: Utica production up a whopping 80% year-over-year; link to new maps. 

June 10, 2016: Utica and Marcellus numbers are updated here. 

August 30, 2015: the Utica may be bigger than the Marcellus. 

July 16, 2015: the Utica is huge; new assessment; a must-read. 

April 12, 2014: Ohio geologists associate fracking with earthquakes; ban fracking in some areas; strict new seismic monitoring rules. Say good-bye to the Marcellus and the Utica.  This should be huge for natural gas pricing. [Update, July 16, 2015:  it wasn't huge for natural gas.]

November 20, 2013: Marathon's plans for the Utica. 

August 26, 2013: Not the Bakken, but important nonetheless: a 7-part series on the Utica at MarketRealist.

Original Post

This page started with comments from others. Now that the page has been started, I will update it periodically.

The Utica looks more and more that it's going to be a "bust" with regard to oil, at least compared to the Eagle Ford, Permian, and the Bakken. Platts, April 19, 2013, is reporting:

While acreage sales in Ohio's Utica Shale seem to indicate a less optimistic outlook for oil production in the region, the play still has plenty of natural gas and liquids to offer, analysts said.

Chesapeake Energy, the largest producer in the play, recently announced an increased natural gas net production target for the end of this year at 330,000 Mcf equivalent/d, a 340% increase from current levels.

But the company is also selling about 94,205 acres in the play, according to Meagher Advisors, an acquisition and divestitures firm involved in the potential transaction. The acreage is in Portage and Stark counties, which is part of the oily window, according to Meagher's website.

Chesapeake Energy spokesman Jim Gipson declined to comment. A handful of other companies, such as Devon Energy, have also recently put Utica acreage up for sale, providing a mixed message of how fruitful production has been.

"We are seeing the same thing we saw in Eagle Ford; there are areas where lots of oil is in place but there is not enough reservoir energy to produce high rates that bring oil to the surface," a regional analyst said. "The wet gas window is what is working, there is plenty of condensate being produced but we are not seeing wells that are 75% oil."

The Utica could turn out to be more of a gassy play with natural gas liquids rather than the oily play that Chesapeake might have billed it as a couple years ago, the analyst said. 

Wow, I noted that in April, 2013. Look at the story that appeared just a few months later: is the Utica a dud?

*********************** 

July 26, 2022: EOG returns to Carroll County, Ohio, heart of the Utica.

July 16, 2013: is the Utica a dud?

June 4, 2013: three projects to follow in the Utica. 

May 30, 2013: 2012 production figures. Unimpressive. 

March 1, 2013: Gulfport Energy, Utica, Darla wells, fracking, 4Q12 earnings

August 31, 2012: Could the Utica out-perform the Eagle Ford?

April 3, 2012, from "anon 1":

CHK has reported on 7 producing Utica wells. 5 produced in 2011. I provided links to the Ohio DNR info in a comment yesterday.

CHK, TOTAL, and EnerVest are very optimistic about the Utica.

The Ohio gov't data is not very informative, as their commentary reveals. CHK has a motive to not tell competitors much. It hasn't. The data is intentionally uninformative, but totally accurate.

Various completion techniques have been tried. Some worked well. Some not.

Big sales or JVs may be from $15,000 (TOTAL's price) to $25,000 by fall, if EnerVest is right (they don't give a price). But, that is for the good stuff. There is a lot of fringe.

Leasing is ongoing at up to $6,000 and 20% for the best land.

CHK estimates that total industry cost for midstream (pipes and processing) for the wet gas area only will be $10,000,000,000.

Lots of good dry gas and lots of oil too. Little data on either.

Very little talk about the Utica outside Ohio. But, it is huge, like the Three Forks. Much is dry gas.

Lots of other layers, including Marcellus.

Scroll for maps:

http://phx.corporate-ir.net/phoenix.zhtml?c=101196&p=irol-presentations

http://files.shareholder.com/downloads/EVEP/1237438893x0x550367/71a3217e-9205-4d45-b0d0-02df50ab2d77/Raymond%20James%20Institutional%20Investor%20Conference%20030712.pdf

CHK totally dominates the play so far. Totally.

Most players are big. CHK, Devon, Anadarko, XOM, BP, Shell, Carrizzo, EnerVest (legacy assets) ... Some local players. A few others.

Utica is just part of a huge basin. It will be very big. Lots to come.

It is much gassier than the WB. Some of the best gas plays in the world.

April 2, 2012, from "anon 1":

Finally they begin to catch on (reference to CITI's talking paper, I believe):

https://ir.citi.com/VxaZkW5OaL4zYu9Ogq9J%2FuWvTZpLXtWSY2Zc62o%2FEXVKGas%2F2iiItA%3D%3D

--------

Spearfish. New data. Also graphs in the presentation.
http://www.legacyoilandgas.com/documents/NewsRelease-April2_2012.pdf
http://www.legacyoilandgas.com/documents/LegacyPPT-April2_2012.pdf

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Data, but not clarity, on the Utica. Ohio gives data from the prior year. Next year may have meaningful data. The most useful thing is probably the Ohio DNR wording. It applies generally, not just to the Utica. They neglect to mention that the operator may not want to educate competitors yet, so may delay completions and choke back production until 2012.

http://www.ohiodnr.com/oil/shale/tabid/23174/Default.aspx
http://www.ohiodnr.com/portals/11/oil/pdf/Utica_Production_2011.pdf